brand assignment

Brand Assignment 2010

BRAND EQUITY

A brand is a name or symbol used to identify the source of a product. When

developing a new product, branding is an important decision. The brand can

add significant value when it is well recognized and has positive associations

in the mind of the consumer. This concept is referred to as brand equity.

What is Brand Equity?

Brand equity is an intangible asset that depends on associations made by

the consumer. There are at least three perspectives from which to view

brand equity:

Financial - One way to measure brand equity is to determine the price

premium that a brand commands over a generic product. For example,

if consumers are willing to pay $100 more for a branded television over

the same unbranded television, this premium provides important

information about the value of the brand. However, expenses such as

promotional costs must be taken into account when using this method

to measure brand equity.

Brand extensions - A successful brand can be used as a platform to

launch related products. The benefits of brand extensions are the

leveraging of existing brand awareness thus reducing advertising

expenditures, and a lower risk from the perspective of the consumer.

Furthermore, appropriate brand extensions can enhance the core

brand. However, the value of brand extensions is more difficult to

quantify than are direct financial measures of brand equity.

Consumer-based - A strong brand increases the consumer's attitude

strength toward the product associated with the brand. Attitude

strength is built by experience with a product. This importance of

actual experience by the customer implies that trial samples are more

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effective than advertising in the early stages of building a strong

brand. The consumer's awareness and associations lead to perceived

quality, inferred attributes, and eventually, brand loyalty.

Strong brand equity provides the following benefits:

Facilitates a more predictable income stream.

Increases cash flow by increasing market share, reducing

promotional costs, and allowing premium pricing.

Brand equity is an asset that can be sold or leased.

However, brand equity is not always positive in value. Some brands acquire

a bad reputation that results in negative brand equity. Negative brand equity

can be measured by surveys in which consumers indicate that a discount is

needed to purchase the brand over a generic product.

Building and Managing Brand Equity

In his 1989 paper, Managing Brand Equity, Peter H. Farquhar outlined the

following three stages that are required in order to build a strong brand:

1. Introduction - introduce a quality product with the strategy of using

the brand as a platform from which to launch future products. A

positive evaluation by the consumer is important.

2. Elaboration - make the brand easy to remember and develop repeat

usage. There should be accessible brand attitude, that is, the

consumer should easily remember his or her positive evaluation of the

brand.

3. Fortification - the brand should carry a consistent image over time to

reinforce its place in the consumer's mind and develop a special

relationship with the consumer. Brand extensions can further fortify

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the brand, but only with related products having a perceived fit in the

mind of the consumer.

Alternative Means to Brand Equity

Building brand equity requires a significant effort, and some companies use

alternative means of achieving the benefits of a strong brand. For example,

brand equity can be borrowed by extending the brand name to a line of

products in the same product category or even to other categories. In some

cases, especially when there is a perceptual connection between the

products, such extensions are successful. In other cases, the extensions are

unsuccessful and can dilute the original brand equity.

Brand equity also can be "bought" by licensing the use of a strong brand for

a new product. As in line extensions by the same company, the success of

brand licensing is not guaranteed and must be analyzed carefully for

appropriateness.

Managing Multiple Brands

Different companies have opted for different brand strategies for multiple

products. These strategies are:

Single brand identity - a separate brand for each product. For

example, in laundry detergents Procter & Gamble offers uniquely

positioned brands such as Tide, Cheer, Bold, etc.

Umbrella - all products under the same brand. For example, Sony

offers many different product categories under its brand.

Multi-brand categories - Different brands for different product

categories. Campbell Soup Company uses Campbell's for soups,

Pepperidge Farm for baked goods and V8 for juices.

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Family of names - Different brands having a common name stem.

Nestle uses Nescafe, Nesquik, and Nestea for beverages.

Brand equity is an important factor in multi-product branding strategies.

Protecting Brand Equity

The marketing mix should focus on building and protecting brand equity. For

example, if the brand is positioned as a premium product, the product

quality should be consistent with what consumers expect of the brand, low

sale prices should not be used compete, the distribution channels should be

consistent with what is expected of a premium brand, and the promotional

campaign should build consistent associations.

Finally, potentially dilutive extensions that are inconsistent with the

consumer's perception of the brand should be avoided. Extensions also

should be avoided if the core brand is not yet sufficiently strong.

Measuring Brand Equity

There are many ways to measure a brand. Some measurements

approaches are at the firm level, some at the product level and still

others are at the consumer level.

Firm Level: Firm level approaches measure the brand as a financial asset.

In short, a calculation is made regarding how much the brand is worth as

an intangible asset. For example, if you were to take the value of the firm, as

derived by its market capitalization - and then subtract tangible assets and

"measurable" intangible assets- the residual would be the brand equity. One

high profile firm level approach is by the consulting firm Interbrand. To do its

calculation, Interbrand estimates brand value on the basis of projected

profits discounted to a present value. The discount rate is a subjective rate

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determined by Interbrand and Wall Street equity specialists and reflects the

risk profile, market leadership, stability and global reach of the brand.

Product Level: The classic product level brand measurement example is to

compare the price of a no-name or private label product to an "equivalent"

branded product. The difference in price, assuming all things equal, is due to

the brand. More recently a revenue premium approach has been advocated.

Consumer Level: This approach seeks to map the mind of the consumer to

find out what associations with the brand the consumer has. This approach

seeks to measure the awareness (recall and recognition) and brand image

(the overall associations that the brand has). Free association tests and

projective techniques are commonly used to uncover the tangible and

intangible attributes, attitudes, and intentions about a brand. Brands with

high levels of awareness and strong, favorable and unique associations are

high equity brands.

All of these calculations are, at best, approximations. A more complete

understanding of the brand can occur if multiple measures are used.

Example

In the early 2000s in North America, the Ford Motor Company made a

strategic decision to brand all new or redesigned cars with names starting

with "F". This aligned with the previous tradition of naming all sport utility

vehicles since the Ford Explorer with the letter "E". The Toronto Star quoted

an analyst who warned that changing the name of the well known Windstar

to the free star would cause confusion and discard brand equity built up,

while a marketing manager believed that a name change would highlight the

new redesign. The aging Taurus, which became one of the most significant

cars in American auto history, would be abandoned in favor of three entirely

new names, all starting with "F", the Five Hundred, Free star and Fusion. By

2007, the Freestar was discontinued without a replacement. The Five

Hundred names were thrown out and Taurus was brought back for the next

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generation of that car in a surprise move by Alan Mulally. "Five Hundred"

was recognized by less than half of most people, but an overwhelming

majority was familiar with the "Ford Taurus".

BRAND CREATION & BRAND BUILDING

Steps in brand creationwe have seen the need of well-established brands and how important they

are in the present times. Let’s look at the process by which a brand is

created.

Brand creation is not just naming or symbolically tagging a product but it

goes much beyond this. It is birth of a brand, which is headed towards

fulfillment of all promises and guaranteeing top class services and products.

Such a brand enjoys top of mind recall from its customers and a high level of

brand loyalty.

Inception of an **** name or symbol **** successful launch **** brand ****

top of mind

Idea or product of product of product recognition recall

Above process shows the way in which a true brand is born and becomes

deep rooted in minds of the customers.

Name and symbol as a brand

the name is the first skirmish in the battle for consumer recognition and it is

very important to make it a preemptive strike. The most important aspect of

a brand's name and symbol is that it silently speaks everything about the

company or product. Every name and symbol is associated with certain

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values, features and it tries to build a relationship with the company or

product.

Nike is the best example of how a symbol is best utilized and exploited and

its strong association with the products. Nike is symbolized by a tick mark or

something which is always right. The business card of a Nike employee has a

tick on it instead of the company name and still people make out the

company where the person is employed just by looking at the tick

Many companies have failed to make a mark, as they could never convince

their customers in the shortest way i.e. through a meaningful symbol what

they were promising to do. Well-established companies are now spending

cores of rupees to get a new logo that revamps their image and creates a

new brand of a company that has a new vision. Videocon, Mahindra and

Mahindra and Tata's are a few examples to give.

A corporate punch line is also an attempt to go one step forward and share

your vision with other people and this also helps in creation and

establishment of a strong brand. No wonder Wipro, the company headed by

the richest Indian spent a massive amount of Rs.35 crore rupees for a new

logo, the bright sunflower and an impact punch line, Applying thought.

Successful launch of a product

Brands are created to serve the customer so it becomes mandatory for a

company to first know what the customer wants. A successful brand creation

calls for a thorough survey of market to find out what features are desired by

customer in the product and whether he really wants the product or not. A

top class brand with best features and best services can fall flat on its mouth

if customer does not need it. This is what precisely happened with Real Value

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a company that introduced vaccumisers and fire fighting instruments in

India. But the Indian consumer was not ready for this product because of

which the company failed completely in introducing a good product.

The extensive market research is a prerequisite for the successful lanch of a

brand.

Understanding the customers, their needs, likes and dislikes helps to know

what the customers want.

Analyzing the competition: Competitors are companies which satisfy the

same customer needs. Once a company identifies its primary competitors, it

must ascertain their characteristics, specially their strategies, objectives,

strengths and weaknesses, and reaction patterns.

A customer value analysis should be carried out to reveal the company's

strengths and weaknesses relative to various competitors.

The important steps involved are

Identify the major attributes customers' value.

Assess the qualitative importance of the different attributes

Assess the company's and competitors' performances on the different

customer values against their rated importance

Examine how customers in a specific segment rate the company's

performance against a specific major competitor on an attribute-by-attribute

basis

Monitor customer values over time

After the desired features are incorporated in the product and it is given a

name, its future lies in a launch that positions it at the right place and right

time. A company should thus know where its customers are. Aggressive

advertising coupled with proper distribution will ensure proper availability of

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the product. In case of a long lasting product, attention should be paid to

after sales service, which plays a major role in differentiating between two

companies.

Branding for service industries

Reasons for branding services :-

Although the principles for branding of goods and services are generally the

same there occur some differences. These arise from the different natures of

both categories. The main differences that influence branding policies are

that services

· have a changing level of quality,

· The consumer has to become involved in the consumption of a service

Actively,

· They are intangible and not storable.

When a brand in general gives the consumer more confidence in his choice

this is even more important for services. Their quality and other features are

more difficult to assess. Because of their intangibility and complexity it is

harder for the customer to distinguish between the offers from the wide

range of service companies operating in the market place.

This especially applies to the market of accounting, auditing and consulting

where consolidation and globalisation increase competition. In an FT-article

about branding accounting services (Kelly 1998) a branding expert states

that “more than 70 % of the Fortune 500 companies ...said branding is

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increasingly important in helping them to choose where to get a service.

They want to be able to tell who is good at what.”

Brand structures for services industries :-

As for services, literature suggests to use the companies name – a so called

corporate brand – as the overall family brand for all the services offered.

Murphy (1990) calls this the “monolithic approach”. He argues that

especially for companies which offer an enormous array of services (e.g.

consultants, banks) corporate names must be used to deliver more

generalised benefits of quality, value and integrity. de Chernatony (1996)

comes to the conclusion that corporate brands are a crucial means to help

make the service offering more tangible in consumers minds and can

enhance consumers perceptions and trust in the range of services provided

by the company.

One disadvantage of corporate brands – little opportunity for developing

second or sub-brands for differentiated product lines– applies more to

branded products. However Murphy (1990) states that many companies

have chosen an approach of “local autonomy but group-wide coherence” as

a system whereby individual divisions and products are largely free-standing

but mention is made in all literature and on all stationery and products that

“company A is member of the XYZ group”. This approach is very common

amongst the Big Five accounting and auditing firms. It allows their national

member firms, to exploit the groups brand name and their own (brand) name

at the same time. Many member firms that had joined the global firms have

long traditions and a good reputation of their own. For them it is important to

demonstrate their clients that these qualities are not lost, on the contrary –

other qualities and services are added.

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Kelly (1998) sees three obstacles to develop a strong global corporate brand

for the large accounting firms:

· National partnerships value their individuality over “corporate”

discipline

· National regulations and cultures make it difficult to work smoothly

under

one global set of values

· The diversity of services offered makes specific branding impossible.

The first two points closely relate to quality and consistency, two issues that

customer value in a brand. They need to be monitored and controlled

carefully. I think that – under the pressure to globalise and with ongoing

integration of national member firms at least the Big Five will be able to

overcome these obstacles to a greater extend. The third point should be

tackled with a strong corporate brand that stands for all services. The “Big

five” see one competitive advantage over smaller firms in their ability to

offer every service their client might need in every place of the world.3.4

Choosing a brand name

The decision for a brand name has to be taken carefully because it can have

a long term influence on the success of the branded product or – in the case

of a corporate brand – of the whole company. Murphy (1990) and Dibb

(1997) give a list of factors to take care for

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To pick out one issue of the process of developing a brand name, there is a

big choice in the spectrum from descriptive to free-standing names which

are often artificial words with no obvious relation to the good or service. Free

standing or arbitrary names are more suitable if they are to stand for a

variety of services since there is no initial associations with this name. In

addition they are the potentially strongest form of trademark in legal terms.

(Murphy 1990)

As for professional services firms a common theme in the brand names is

the use of the companies founder's names. For instance the name KPMG

stands for Klynveld, Peat, Marwick and Mitchell, Goerdeler. In the process of

the merger between Price Waterhouse and Coopers & Lybrand they had to

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develop a new name for the new company that would exploited the

reputation and heritage from both old names. This was important for the

relationship with the existing customers as well as for the relationship with

all employees. The result was the name PricewaterhouseCoopers. This

corporate name is formed out of three names of founders of companies

where the new company originates from (Price, Waterhouse, Coopers). Both

names are completely free-standing. That’s why they properly address the

issues of suitability for different media, different markets and cultures and

different products as well as the issue of imitation and legal protection.

Marketing a service brand

In general marketing strategies for services add three more P’s to the

marketing mix, which stand for Process, Physical evidence and People. The

same principles apply to the branding of services.

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http://www.themanager.org/marketing/branding.htm


de Chernatony (1996) emphasises the importance of the people as the

provider of the service. The careful selection and training of staff firstly

assures a higher level of quality of the service, that is depicted by the brand.

It is up to the people to give the processes more reliability and thus to assure

a

higher homogeneity between the quality of the service and the personality

and message of the brand. Furthermore people have contact with the

customer. They have to be aware of the brands objectives so that they can

“live them” and communicate them to the customer. It is not enough to

communicate the message of the brand externally to the customer; the first

step has to be internal communication.

Here the principles of internal marketing play an important role. Staff is seen

as the first customer of the brand. Kotlers (1999) typology of marketing in

service industries applies equally to the marketing of brands in service

industries:

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The theme here is that the customer not only receives the message from the

companies external marketing activities, but also the message from the

behaviour of the staff he has contact with. The impression the customer gets

from the service, from the company and thus from the personality of the

corporate brand is also influenced by the friendliness and responsiveness of

staff, their perceived qualification and how the staff “lives” the philosophy of

the corporate brand.

The element of physical evidence is about the environment in which the

service is offered and consumed, it is about the customers “feelings” (Dibb

1997). As for branding services, the physical evidence is closely related to

the personality of the brand, which can be described as an emotional bond to

the customer that grows out of the perceived characteristics of the brand. To

give the service a differentiation advantage it is important to create a

distinguishable atmosphere that the customer can relate to the service

provider. This can be achieved by the use of corporate brand signs,

corporate colours and several other themes that are common for all outlets,

all employees everywhere the company presents itself to the public.

As for branding auditing and consulting firms, physical evidence is more than

just to have a visible corporate identity. It is about bringing a message

across. In this industry the message of the brand has to establish the

emotional bond to the customer which is one of the few ways for

differentiation. Kelly (1998) gives an good example when he says ”Some

clients may ask how brand building sits alongside the traditional virtues of a

professional partnership – skilled individuals with independent minds able to

solve problems on a case by case basis. The real challenge is turning that

into a brand.” Up to now many accounting and auditing firms use their job

advertisements to send out their brand personality. Job ads for professional

services are much more than a means of attracting qualified people. They

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allow the companies to present themselves with some unique personality.

Today’s job advertisements not only use corporate colours and logotypes,

they tell little stories, transfer messages, describe corporate cultures, and

the skills and experiences of the people in these firms. For the companies

the job advertisements are a good way to present the variety of services

offered when they search specialists for a certain position. In that way the

firms can make their brand and its personality more known amongst possible

employees and possible clients.

Processes are very important in services industries since in most cases the

customer is directly involved in the processes. Aspects that especially apply

to the auditing and consulting industry are extremely high quality,

confidentiality, timing/availability, consistency and the avoidance of the

abuse of insider knowledge. The internal processes that assure these

characteristics are less important for the customer. For him it is important

that these characteristics are met. Again a brand can provide more

confidence in the choice of a service provider. It allows to identify a provider

with a good reputation for high quality processes and results. As with most

other services the quality of the auditing or consulting processes can not be

tested in advance. Moreover, you can change your hairdresser if you are not

satisfied but it is much harder to change your auditor since public normally

perceives this as some sort of sign for alert.

On the other hand, even if necessary, there are dangers in relating a brand

to closely to the quality of processes. Poor quality in only one single case can

affect the whole brand. Many of the professional services firms have faced

the problem that one of their major clients went into bankruptcy or was

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accused for some illegal activity. In such situations the media often ask

about the quality of the auditing processes.

We can see that the processes that deliver the service closely relate to

consistency as one of the issues customers value in brands.

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